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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

PIXEL WIDTH
528

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480

TOPIC FREQUENCY

Us 29, U.s. 24, Leucadia 21, Imax 16, Carl 13, S&p 12, Washington 11, Greece 10, Jeffries 9, Sears 9, Europe 8, Samsung 8, Beazer 7, Apple 6, United States 6, New York 6, Bob Lutz 5, Horton 5, Penney 4, China 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    November 12, 2012
    9:00 - 12:00pm EST  

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hd hasn't rolled out in turkey and russia. it's a big hedge for us. >> thank you for being here. >> appreciate it very much. join us tomorrow. "squawk on the street" begins right now. good monday morning. welcome to "squawk on the street." i'm melissa lee with carl quintanilla, david faber and jim cramer. we kick off the week better than we had seen last week. looking at a higher open across the board after the worse weekly losses with both indices closing below the 200-day moving average on friday. looking at the action over in europe, we are seeing small gains across the board. our road map starts on capitol hill where congress returns to work tomorrow as leaders prepare to meet with the president this week on the fiscal cliff. lawmakers over the weekend sound optimistic that a deal will be
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reached. how likely is that? >> jeffries gets bought in a $3.7 billion deal. leucadia is described as a mini berkshire hathaway. >> a war to see who will open earliest on black friday or on thanksgiving itself as it turns out. >> first up, after coming off the worst week for the markets in several months, wall street looking for signs the president and lawmakers can strike a deal on the cliff before the end of the year. on the sunday talk shows some expressed optimism that a deal could be struck. >> i don't really understand why republicans don't take obama's offer to freeze taxes for everyone below 250,000. make it 500, make it a million. the republican party will fall on half who voted democratic and half who live in hollywood. >> we're beginning to see some
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really from the right side of the party saying let's get this done. we learned a lesson of sorts in the election. don't let it go to waste. >> seems like there's a split in the republican party and people that want to make a deal and people that say there's no deal and the no deal crowd is now being identified as crystal did with we don't want to deal. we want to bail out millionaires. >> i continue to hear the rallying cry from those who are against raising the rates on the highest earners that it's only going to raise 80 billion or 100 billion, 110 billion maybe the high. we have a trillion dollar deficit. you continue to hear that argument which doesn't make a great deal of sense in the sense that you need sacrifice and everybody to buy in and that's going to have to happen as well. i do wonder if that's going to still have resonance with one part of the republicans particularly in the senate that may prevent this from getting done.
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>> this is one of those situations where we hope that the greek will pay money. we're looking at greece saying why can't they get to some sort of surplus or something. same thing here, guys. don't look to greece to try to solve the problem. we can solve the problem. it's just a big puzzle. i agree with you. at any given moment, one piece won't matter. it's all medicare any way. what's the deal? you have to start somewhere. >> pressure continues to be placed by the ratings agency, moody's addressing the cliff saying if there isn't a plan in place, deferment isn't enough. they need a credible timetable. if they don't see that it would be inconsistent with maintaining a aaa rating. the u.s. is on negative outlook. s&p already downgraded. >> i think that we all kind of
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remember what happened -- i think that the big worry on the left side would be i think listen, nothing happened. interest rates went down again. that's a scare tactic. i'll use a scare tactic. $600 billion in new taxes january 1. that's reality. >> unemployment going back to 9.1 if this happens. that's a number that gets your attention. the "times" does a nice piece about fix the debt group. groups of very large companies trying to weigh in on their own side with ads. i don't know if we have them right now. nike with a mock nike ad that says just fix it. mcdonald's saying i'm fixing it. >> home depot. we can fix it. >> that group raised a lot of money over the last year or so. $30 million, $40 million, more than you might have anticipated
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to mount this public campaign. >> dave is doing a lot of great things. ceo of honeywell. wants to put aside -- i don't know if he's a democrat or republican. i know he's a good neighbor. we have a good fence. >> what happens if we do move along into december and we get both sides but we're not really any closer to a deal? >> we go down. any adviser who has no idea what tax rates should be and that they may go up, should tell clients to sell. >> just the dividend yield if taxes go higher, the average yield is 2.04%. at current rates, that's equivalent to 1.73% yield. if you take that tax up to 39.6%, the yield goes down to 1.23%. it's a difference of a half of a
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percentage point. for yields, that's a lot. >> i think that we've seen this kind of wholesale shift away from those stocks. i think that whether it be apple, i had to mention apple. whether it be apple or people with a big capital gain, whether it be duke where people have a big dividend. there's so many reasons to sell. i think that even a known bad is better than an unknown anything. a known bad i can make plans. right now i just presume everything is good. >> let's get m&a news this morning broken by our own david faber. jeffries will be acquired 3.7 billion in stock. that's a 23% premium. is that as of the close on friday? >> stock was around 14.5 or so. when you do .18 shares you get to around $17.60 are spinning
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off a wine business. not particularly large. >> were you looking at that last week when you were in napa? >> so you may have that impact. we'll see how leucadia shares do this morning. if reaction is positive, that will mean the deal will be worth even more. it is still below the 52-week high of jeffries. it is well below the $24.25 mark they sold stock at in april of 2011, which may make some shareholders unhappy. it's a lot more than that stock was trading for a year ago when it was starting to battle some arguments. >> that last bond for mf global. >> you can participate by holding a combined share of the company. many people way not know
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leucadia. they own 27% of jeffries. there's been a great deal of cooperation between the two companies for some time. leucadia has a paortfolio of businesses. great returns. jeffries ceo will become ceo of the combined company. there had been questions about succession at leucadia. joe steinberg, 69 years of age. he'll become chairman. they answer that. >> the question is whether this is the future for some of these small to mid size financial firms. the argument is rougher markets on the way. you want a broader balance sheet to help you through them. >> no doubt. more capital is part of this deal. there's also deferred tax asset or tax loss carried forward.
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they will still be ceo of jeffrey jef jeffries and run the company of leucadia. roes, 6.5, 7, 8% for wall street driving a lot of behavior. that move by ubs a couple weeks ago to get out of fixed income and really focus on wealth management, that is where i'm more interested in seeing whether there's going to be any followthrough perhaps from other well known wall street firms. >> business is changing rapidly. i remember jeffries trading high yield. that business isn't so good. ubs is fixed income. that was a really great business. >> you can't make as much money because you have to hold more capital. issuance is through the roof. >> great year. >> it's the trading. it's so much that goes along with it where you really were
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able to get a great return that you can't get a strong of return any longer. >> too much position. >> nice to see action on a monday. >> a little bit. >> not much else. >> these usually are the big mondays of the year. before thanksgiving. before that period where we'll start to run into the holidays and we're still getting really just a triple. somewhat surprising. we'll see how -- >> doesn't rise your needle? >> doesn't ride to yours? >> no. it's a deal. >> it's a deal. it's a deal. there have been very few and far between as we've said many times. we're down to the last few weeks now. we'll see. >> time for rise and shine for yo your portfolio. with failure to resolve the fiscal cliff, could it put the u.s. auto industry into
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jeopardy? it looks like a celebration remembrance of veterans day here on the stock exchange. more "squawk on the street" is back in a moment.
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>> just chatting with jim here prior to the bell. early edition of mad dash due to commemorations we'll have regarding veterans day. we'll hear from the united states marine corps celebrating
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a birthday today. but ahead of that, quarter past the hour, let's get cramer's mad dash ahead of the market open. watching pharma data. >> we tend to say because of fiscal cliff considerations because of the election, there's no big money made. you heard david talk about leucadia. we haven't had a lot of deals. where we have had tremendous success is biotech. and hep c, millions of people have hep c. it can be fatal. attacks the liver. the studies that we saw this weekend tell me that they and abbott -- abbott has something too. gilead is a first mover. >> top gainers for the year. >> gilead has been incredible. they had a vision that hep c would be the most important
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disease. the pharma guys didn't get it. that's why gilead is up seven. bob came on "mad money" several times and said when the stock was down here, he's amazing. when the stock was right here, he came on and said this is wrong. we have so much in the pipe. turns out they bought this company that had this drug and it's been a great anti-cancer drug. pancreatic cancer, horrendous cancer. didn't think there was anything for it. they have something. it's working now. i don't know how long it will work to save people's lives. it's a huge company and a big gain. i'm urging people at home, do not give up on stocks. it is true that we could really fly if we solve the fiscal cliff. they are everywhere. you have to know where to look for them. >> a downgrade today at jeffries in which they say companies having to lean more on pharma
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because of the weakness. >> what i see in j&j they are hung up on government. i disagree with the downgrade. you have a guy in charge at johnson & johnson. this is not the same j&j. this is not the problem where they had a pharmacy factory that kept going bad. don't sell j&j. they have a great ceo. >> we'll talk more downgrades later today. one on cat. >> i disagree. broken clock maybe. >> when we come back, we'll get ready for opening bell. new york stock exchange honoring americans veterans today. "squawk on the street" is back in a moment. ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers...
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new york stock exchange is about to commemorate veterans day by observing two minutes of silence followed by the playing of "taps." there will be a minute of silence at 11:00 a.m. eastern time as well. it's one of those holidays that probably doesn't get enough attention. bond markets closed. stock market open. people trying to do business as. it's important to remember -- >> it used to be closed. >> we were talking a lot about the 99% and the 1%. he made the point in our world, it's 1% that being the military fighting for the other 99%. something always to keep in mind on this day as well. >> always surprises me that the exchange rolled back certain days that were holidays. this is one that we should have
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brought back. >> later on today they will celebrate the 237th birthday of the united states marine corps but in the meantime, here's two minutes of silence.
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[ taps playing ]
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>> coming off an election and fierce political season, it's important to remember what people have given over hundreds of years to allow us to have discussions that we're having as difficult and feisty they may be. >> i had an opportunity to go to the world war ii memorial in new orleans recently. it's the most comprehensive documentation of a generation
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and what they did. i took my dad this weekend. he was in the pacific. my dad is a businessman. worked hard. good dad. suddenly you forget what these guys went through. amazing. >> we'll get back to business and talk stocks here in a moment. the opening bell just a few minutes away.
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it's just common sense. from td ameritrade. welcome back. opening bell a few minutes away. 2% loss for the dow last week. 277 points. dow is down four out of five weeks. off 6% from the high. i wonder if you think there's any sign given some of the optimistic tone we heard politically over the weekend, you were on "meet the press." do you think that's changing? >> i don't think so. i think this is going to go on for too long. this is involved to try to get it solved. i think there are a lot of people on both parties that really have dug in their heels and i think that every time we feel there's momentum in washington, it's disappointed us. i'm willing to say this is over. it's great that they are
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talking. anybody who has bet on washington hasn't done that well on washington doing the right thing. hasn't done that well. >> do you feel like sentiment has shifted so far to one side and that is a pessimistic side of things that maybe there's risk to the upside at this point in terms of not being in the markets? >> i think that people feel like it's a risk-free sell of stock to be able to get that capital gain in. i guess what i'm more worried about is earnings. the more they dither, the more numbers have to come down. we have retail companies that report this week. i can tell you i'm confident maybe there's a deal and then you get whacked by the numbers. we need to see a deal quickly so that the fourth quarter doesn't go away. >> speaking of retail, a lot of retailers moving up black friday into thursday. thursday night specifically. this is a terrible statement in terms of the values of the american family in spending time together on thanksgiving i think. other than that you have to
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wonder whether they'll gain sales or if it will be a pull forward of sales that would have happened at these companies or if it's a true chance at gaining a bigger percentage of a consumer's wallet earlier on in the season and stealing that from another retailer. >> it's a bad sign. i don't trust retail here at all. i think that the consumer is fearing a lot of what we fear. i think the consumer is worried that we'll slip back in recession and they can make this thing and move it to tuesday. it just doesn't matter. i think that people are going to shop depending on their head, they think the house is better. they think the market is worse. i want to be more optimistic. there are other times where it does pay to be optimistic. i think that most people -- i think most people think that the cliff will be resolved. i really do. most people think there's good news. i think it drags out and that makes me very skeptical of buying any of these retailers. >> here's what it will look like on thanksgiving day.
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8:00 walmart and sears will go head to head. toys "r" us joining them at 8:00. hour later, target. macy's and kohl's at midnight. that's the same as last year. >> if sears is open at 8:00, forget the family. the heck with that. sears is open at 8:00. >> millions of people who will have to cut their thanksgiving short. >> that's it for mashed potatoes. >> that's not right. >> you don't think so? >> to get to sears and get yourself a new kitchenaid. >> they'll be there during dinner time. >> it's a real statement. statement of what? >> i don't know. >> statement of what? the quarter needs to be made. the quarter must be made. great. >> as we get to the opening bell, we'll show you the s&p 500 at the top of your screen here at the big board. u.s. marine corps major general michael dana commemorating veterans day marking the 237th
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birthday of the marine corps. over at the nasdaq, cresud. we'll keep an eye on how the companies are faring. a story about best buy hiring the former cfo of william sonoma who shrunk the store base and made online component larger. two big things that best buy has to do. >> very challenged. i think that by hiring her she will not shop at amazon for christmas holidays. she'll probably shop at best buy. it's a retail situation. they have to retail customers. i don't believe in best buy as a thesis. i don't believe in best buy as a takeout. i believe in best buy as one more retailer with no reason for living. >> jcpenney -- >> no reason for living is rough
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language. >> tell us what you really think. i'm not sure i understand that. >> involved in retail all my life. i was talking last week about retailers that have gone under over time. amazon has accelerated the process. jcpenney, i blasted them nine times on friday. what was the feedback i got from people in retail? you weren't negative enough, jim. you weren't negative enough. >> saying they're going bankrupt isn't negative enough? >> i say they are challenged financially. >> underperform rating. price cut by $15 a share on jcpenney saying time is no longer on jcpenney's side. >> you have a guy with a fresh strategy. >> they need a fresh strategy. it's nice to see. you have to give an opportunity to try. i would assume his large shareholders, chief amongst them are still supportive.
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>> and why do they downgrade? they made an investment in jcpenney. merrill lynch. 26% stake. >> that's correct. >> you shop there. i always like to ask people who tell me they like -- what did you think when you went to jcpenney? did you like it? no. i don't see people who go. >> what about the free haircuts? >> that's for kids. >> that doesn't do it for you? >> i did go to the one at 34th. they did have some bargains. i bought some trousers. >> you never went back after that. >> i didn't go back because, i don't know, you go there and maybe the new stores look -- i found myself asking what am i doing here? does anyone know where the pants are? down there. i like a target. you go to target, i know where everything is.
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very nice. >> i love that. >> your kids are a great judge. where do you want to go? jcpenney? dad, you are so ridiculous. >> you go to urban outfitters and that's a story i can tell. i can tell that story. i will go to pier 1 to get thanksgiving things on the table. i'll tell that story. >> here's a story not worth talking about. west performing dow component down a percent here. jpmorgan cuts it to neutral. price target 109 to 90. mining cap under pressure. election focus for her.
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>> when analysts put cat on the buy list, it's underperformed. year-to-date stock is down 6% versus s&p up 12%. is this the right time for her to pull it or perhaps whenever she does it, you should do the opposite like charitable trust is going to do? we're shopping for caterpillar. >> all right. >> precision cast parts another deal announced on friday actually. shares are higher by 5% today hitting a fresh high today's session. buying titanium metals, $4.29 billion. a premium to friday's close. titanium metals down 23% this year. pcp a nice run on the back of this deal. >> i think pcp has been connected to the aircraft cycle, titanium trying to figure out where they fit in in the new
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area of composites. this stock has done nothing for years. ever since the previous boeing cycle, titanium is out of fashion. i can't believe precision cast parts is up this much. it cuts to what david talks about. why are there no more deals even though every time someone acquires something, the stock goes up. >> the fiscal cliff. that's it. colored consumer confidence the wrong way and they can't do anything. can't move. fiscal cliff. fiscal cliff. >> i don't know what to say. i don't know what to say. you mock me. >> i'm not mocking you. i'm mocking them. >> who is them? >> ceos. >> okay. i thought it was some broad international conspiracy including tri-lateral commission of the queen of england. >> just ceos who to your point are still very much undecided about making a big move. >> hold it. >> for a variety of reasons to
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be fair. it's that so-called uncertainty associated with things like the fiscal cliff no doubt about it. it's also the fact that making a big move in m & a typically if you're not rewarded perhaps where as if it goes well -- if it goes poorly you're going to lose your job. >> precision is the best in aerospa aerospace. you told me off camera they are really smart guys. the people who are stepping up tend to be smarter than the average bear. >> that may be the case. and in these kinds of environments where we see few details often those are the best deals. it's when everyone has confidence and equity markets are up and everyone is feeling great that they do stupid things. >> right. there you go. >> let's check in with bob pisani here on the floor with more of what's moving this morning. >> boy, did i hear dumb talk over the weekend about going over the fiscal cliff. i guess you were going to hear it. go ahead. let them go over the fiscal cliff. who cares. i heard this even from some
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people whose opinions i respect. well known economists and columnists. good heavens. did anybody look at what happened last time we were talking about this? the fiscal cliff is a wake-up call to politicians. august 2011, we were all here sitting on this floor when they couldn't agree on simple ability to raise the debt ceiling and they downgraded the debt. remember what happened? the s&p dropped 7% that week on the monday after it dropped another 7%. the vix went to 50 for a long time it stayed there. it ruined it the entire summer. almost the entire year of gains for virtually everybody. does everybody forget that? no consequences. i think not. there will be very serious consequences. we cite the obvious. imf, congressional budget office, all of them saying that we will go into a recession if we go over the fiscal cliff. that unemployment will increase rather drastically. the funny thing is everyone knows that the deal is within reach. you can work on it with a napkin, on the back of a napkin you could put it out.
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republicans say they'll accept higher revenues. about the idea of just limiting exemptions from higher income brackets? how about that? that's not a hard one. bill crystal had it over the weekend. why not let higher taxes for people that make over a million. the deal is within reach. it's time everyone comes together and makes it. let's talk about the man of the hour. the man of the day. the ceo of jeffries. this guy pulled it off. remember last year, i know you were talking about this. the pressure on this guy last year to sell out after mf global collapsed for $10 a share or some absurd price. the guy held on. he stuck to his guns. stayed with it. $17.66. a 23% premium. that's an outstanding number. that man is the man of the hour in my opinion. look at what he's got out of this thing. number one, we all know how lousy this business is. they're going to have a lot more capital that will increase firepower and ability to
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participate in larger deals to withhold against shocks to the system and the guy is ceo of leucadia. he maintained his position and is back on top. that's my man of the hour. here's to you. guys, back to you. >> agree with you. let's check out latest news in energy and metals and go to sharon epperson at the nimax. >> the markets are jittery here. we have wti oil prices below $86 an oil and brent crude jumping up toward the 110 level. bob outlined the concerns about going over the fiscal cliff and what that means for the u.s. economy and what ripple effects it will have globally. there's also of course concern about what's going to come of the eu finance ministers meeting over greece and that's going to be an impact on the markets and we have geopolitics and israel saying they won't take direct hits from syria. that is something that the market has been watching very closely as well. the big story that has long-term
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ramifications for the u.s. oil industry and for the global energy trade is definitely the report today from the international energy agency where they said that they believe that the u.s. will become the top oil producer in the world by 2020. overtaking saudi arabia. overtaking russia and the fact that u.s. will be self-sufficient by 2035. this is a huge sea change in the debate that we've been hearing about the dependence on foreign oil, about green energy and the fact that we're looking at this share revolution is having an impact not only on oil markets but natural gas markets here in the u.s. and international energy agency highlighting this in their report. back to you. >> thank you very much. shares of disney getting an upgrade after getting battered last week. citi upgrading from buy to neutral. they are saying that lucas films acquisition will weigh short terms on profits but it paves
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the way for a good 2014 and 2015. stock is moving up higher in line with markets. we watch shares of leucadia. nice run. down 1.8% now. >> jeffries up 15%, 16%. the deal we've talked about this morning. bob is talking about richard who will be ceo of the combined company. two very large shareholders in leucadia am mr. steinberg and mr. cummings. leucadia 9.4% annualized return since the beginning of 2000. over the last 12, almost 13 years. jeffries at 9.2%. compared to 1.6% for the s&p. wouldn't know that. my other favorite chart. we can't show it to you here because we don't have it ready for you. nobody tells you your hair looks like that. >> looks good. >> look at those numbers. >> how far behind this bank
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group is incredible. >> jeffries up 159% since 2000. >> great chart. >> they hope they can do more of the same. obviously existing jeffries shareholders will participate. they're not going to have to pay taxable earnings for quite some time and they increase capital in a significant way. >> big news again. leucadia down by 1.8%. jeffries higher by 8%. >> straight from opening bell this morning celebrating the 237th birthday of the united states marine corps. of course commemorating veterans day as well. major general, welcome. good morning. thank you for being here. >> i have sergeant johns who served in afghanistan. my beautiful wife, my tall son and his wife, melissa. >> great to have you here. welcome. of course the tribute so moving.
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two minutes. taps. what does veterans day signify to you. >> for am he three things. i was raised by a world war ii veteran. i had eight uncles in world war ii and taught me values of the united states and constitution and patriotism and need to serve your country. that's why i joined the marine corps. second thing is vietnam veterans. young officer raised me and taught me right things for war fighting so as i became a more senior rank, i knew what to do when i got into combat. a great job of doing that. the third thing and most important thing is marines that we have today. sergeant johns epitomizes. a year ago sergeant johns lost both legs in afghanistan. he's going to college. he has a plan. he's absolutely epitomized everything the marine corps stands for. thank you for your service. i would like a round of applause for this marine right now. [ applause ] >> very nice.
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actual birthday of the marine corps, the 10th. this goes back to continental congress. >> 1775. your heritage is old. you go back to early 1600s. there's a synergy between what we do supporting and defending the constitution and economic activity. i own a 1984 chevy pickup. chevy says it's the heartbeat of america. you are the heartbeat of america here. the economic heartbeat. >> major general, thank you for your service as well. >> sergeant johns, great american. >> enjoy the day. >> thanks. >> melissa, over to you. >> thanks, carl. up next, look out saudi arabia, a new report says the united states will become the world's top oil producer. could the prediction come true? we have a top oil analyst to weigh in. apple is taking competitors to task over its patents but today apple calls a truce with another smartphone maker. we'll be right back.
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>> what i'm hearing and i speak to a lot of ceos in every different industry is they don't want to hire. the biggest consequence of not knowing what's going to happen is that it's worth it to lay off and not worth it to hire because with just a series of unknowns who can take a chance? who can take a chance with washington? better to scale back retail, restaurant, industrial. fire people. that's the solution to the fiscal cliff until we get an actual resolution. >> that was cramer talking about the fiscal cliff yesterday on "meet the press." corporate executives are launching their own campaign calling on congress to act quickly on the cliff. campaign to fix the debt. it will run more than a million dollars worth of ads starting today. they will look more familiar with slogans like just fix it and time to fix the debt. that brings us to this morning's "squawk on the street" question. come up with your own slogan to
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get congress to rise above partisan politics and fix the fiscal cliff. tweet us. @sidewalkstreet. this warrants attention. ordinary citizens should take heed. this affects everybody. >> the ceos who were applauded were the ones who saw it coming and took action. see it coming means gdp will go down. taking action means we fired faster than anybody else. i think the lesson of that period was those that fired got promoted. those who fired got the praise of wall street. and it just makes too much sense to fire. i don't want firing. obviously i want everyone to have a job. if you take out the 2008-2009 recession playbook, the guys who did the best were the guys who scaled back right now ahead of a recession. >> 50 days in which to implement
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that plan. it's not easy to put together a restructuring plan. you think companies will work quickly to do it before the end of the year? >> i think there's two things that potential deal going forward. one is that executives are speaking up. that does matter. the executives tend to buy congress people. i have quotes around that. they give a lot of money. the other thing is that republicans seem to be really hung up on the idea that hedge fund managers should be able to get private equity and low taxation. they pay taxes at 15%. people who aren't as rich pay it higher. even if capital gains go up, no one is talking about the idea that capital gains will go up huge. maybe republicans who have been great defenders of the hedge fund industry and the pe industry will give in. >> that tax break doesn't amount -- they'll tell you it's not that much money any way. that's what you continue to hear about all of these things which i think is -- >> hundreds of thousands of people pay. that's why they look at it.
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one hedge fund manager pays what 100,000 people pay. >> certainly applies to private equity because it's long-term capital gains not treated as ordinary income even though they are the performance fees which conceivably are what should be your ordinary income. >> ordinary income except if you're a hedge fund manager. >> they rolled in management fees to a certain extent as we learned as well in something that's perhaps allowed but a little more questionable and have that treated also in that very favorable way as capital gain. >> i like the bill crystal comment from the weekend. are you going to go -- are you going to go to the mat defending people who make more than a million dollars? is that where you want to be? maybe 250 is too low. maybe 400 is right. i feel like that principle is not -- i remember when william jennings brian gave that fiery speech. you look back and think that was really bad. how about if you don't want
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mankind crucified on the rate of 15% taxes because you're a hedge fund manager. it doesn't risk like jeffersonian. >> now, lincoln believed -- remember that guy lincoln? he was president. after buchanan. before johnson. yeah. but he was if favor of a redistribution of income for taxes. he was a radical. owned by the known communist party before the communist had been born. >> still had republican in front of his name. that's for sure. when we come back, it's the action packed minute you've all been waiting for. we'll hear what cramer has to say about six stocks in 60 seconds and later, debut of the new bond film. how much windfall did imax get? we'll talk to the chief executive when "squawk on the street" comes back. i just want to give her everything. [ whistles ]
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>> apple's real battle remains with google and amazon. we'll look at retailers opening earlier and earlier over thanksgiving. what does that mean for you as an investor? we may have reached the new point on travel. that's a subject close to my heart. back to you. >> let's get six in 60 with jim. goldman. >> great fiscal cliff story. people eat chocolate and hershey is a play. we see regional banks being upgraded. these are so far behind the market, david showed you numbers from banks. you know what? it's time. it's time. they're cheap. >> the journal shows the race for ipo between the new york
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stock exchange and nasdaq closer than ever. >> dividend is good. high yield. >> horton's numbers were great. best backlog since 2007. remember those jobs? >> jeffries says by deckers. >> shorted nine ways to sunday to use that phrase correctly. maybe they have a feeling that it will come back. >> a few days since we talked gener generac. >> i don't like the news. i would buy it here. >> all right. what's coming up tonight? >> i have westport on tonight. a lot of people -- you see over and over again these op-ed pieces. when will we start using natural gas? exxon run in natural gas in indonesia. no. we have it here. we have this guy's engines. they are used for trucks. you can use them in pickup trucks. use them in locomotives. this guy is the secret.
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the stock has been horrible. >> we'll see you tonight, jim. when we come back, what a year it's been for home builders. sector soaring 100%. do earnings from dr harden mean there's time to ride the rally? we'll talk about that in a moment. how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. but i still have a runny nose. [ male announcer ] dayquil doesn't treat that. huh? [ male announcer ] alka-seltzer plus rushes relief to all your worst cold symptoms, plus it relieves your runny nose. [ sighs ] thank you! [ male announcer ] you're welcome. that's the cold truth!
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let's get a road map over the next hour of "squawk on the street." the battle heating up on black friday. toys "r" us will open doors on thanksgiving night. who will come out on top for the battle for your wallet? >> apple is known to take competitors to task over patent wars. is this a change in strategy for tim cook? listen up, saudi arabia. the international energy agency says the u.s. will surpass you to become the world's largest producer by 2020. is there any truth to that prediction? a top oil analyst is here to weigh in. >> former vice chairman of general motors is here to tell us what a lack of compromise in washington, d.c. may mean for the auto industry. >> moves here continue to be
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fears over the looming fiscal cliff. the combination of automatic tax hikes and spending cuts that could take effect of course if congress can't reach an agreement at the end of the year. eamon javers is in washington taking a look at the four ways the fiscal cliff could play out. >> we have opening gun last week with both speaker boehner and president obama coming out talkital talking about the fiscal cliff. this week we'll see a round of negotiations capped off by a meeting at the white house between congressional leaders and executive branch coming up on friday. where are they going to end up? there are a lot of solutions kicking around town. the final deal is probably going to end up looking like at least one of these different proposals. let me walk you through four of them here so you get a sense of where we might be headed starting with the simpson bowles plan. they would cap the mortgage industry deduction at $400,000. they would also tax capital gains and dividends as ordinary income and they would have the
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employer sponsored health care exclusion phased out. that would be a big tax increase there. another plan that's floating around out there, you would see mortgage interest deduction limited to $25,000 of interest. capital gains and dividends here also taxed as ordinary income and the state and local tax deduction would be repealed. the gang of six plan is another one that's kicking around on capitol hill. that changes tax deductibility of health, charitable giving, home ownership and retirement. they would call on congress to pass broad tax reform that would lower rates and broaden the base and then there's the grand bargain negotiation. this was the secret negotiation between barack obama and john boehner last year. we don't know all of the pieces that were in it. they offered 8$800 billion in revenue and then on the spending cut side they offered $450
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billion in cuts to medicare and medication and changes to the way social security benefits are calculated. a lot of things on the table here. big things both tax increases and spending decreases. it's going to take some combination of those to get to a deal here and it's sort of where they go on this menu of options that's going to lead to whether or not they have votes to do it on capitol hill. >> there's a detail there. cut through it for me if you will. a lot of people around seem to suggest that they're going to get this thing tied up really quite quickly. my concern is that obama is beginning to grandstand. if you look at who he's meeting with, it looks like he might be preparing for a huge fight for his legacy, which actually might push us further back than a lot of people have bargained for. >> what you'll see with obama meeting with progressive groups and business leaders, he doesn't want any constituent group out there to feel like they were left aside.
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he's got to do that prudently before they get to the point where they actually cut a deal. what you saw last week from speaker boehner was a signal that he's willing to raise revenue and he's willing to go back to those negotiations that broke off last year between himself and the president of the united states and come to some kind of deal. the trick is we don't know exactly why those negotiations broke up. the republicans say one thing. democrats say another. who is right? we don't know. we weren't in that room. they were very close last year. if they can go back and get that done and both sides can agree, they might be able to do it relatively quickly but it's a question of political will and are these guys willing to take the pain associated with this. there's a lot of things on here that are unpopular including taxing capital gains as ordinary nick and other things on the table. these will be painful for politicians to agree to. >> getting it past the rank and file. thank you. >> and for fiscal cliff to retail, black friday shopping is
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not just for friday anymore. today target and toys "r" us announcing they'll join other retailers including sears and walmart in opening their doors earlier on thanksgiving evening. joining us now, guys, good to see you both. chris, i'll start off with you. we were having a discussion with the fiscal cliff. how concerned are you of the impact? >> the biggest question was getting the election out of the way. people are always fearful that santa won't show up. santa does show up. we see consumers focus on the christmas holiday and then worry about the bills and paying the credit card bills in january. >> david, do you buy that? >> i do. i think that it's going to -- whatever is going to happen with the fiscal cliff is going to happen. it won't change before holiday. i agree with chris. people will spend into the holidays. they always do. >> let's proceed and talk about individual retailers.
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david, you cover best buy. what's going on there? how important is this new cfo? >> i think it's an important one. she brings a fiscal discipline they haven't had before. she's going to bring a fiscal discipline to the infrastructure and it's also indicative of a new ceo coming in and bringing a very different management team to the forefront and i think it makes this whole issue of a bid even more interesting. >> chris, who do you like the best going into black friday? does it make a difference that some of these retailers are opening their doors 8:00 p.m., 9:00 p.m. on thursday? >> it makes a difference to my thanksgiving night unfortunately. i think if you look at it, it will be a tale of november versus december. walmart will win on black friday. opening earlier. a better layaway plan. deals including ipad 2, 399 but
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you get $$75 walmart gift card are powerful. target with easier comparisons, very low expectations. impressive neiman marcus exclusive in early december when the consumer hits the pause button. they win in december and relative to the stocks, i think walmart is presumed to do well where target is presumed to do not well. >> i'm curious, in terms of changing the consumer behavior, i believe that still most sales for the holiday season are done ten days before christmas. do you think that could actually shift out as we begin the shopping season earlier? >> i think last year you had a lot of retailers that started their deals in early november and kind of black friday in mid november sort of deals. that pulled forward sales. that seemed to calm down this year. so i think the normal seasonality of intense black friday weekend the last ten days before christmas being the biggest weekend but target
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having the neiman deal in early december will be a distinct traffic draw for them. >> we continue -- i don't know if jcpenney is in your universe but dynamic of retailers feasting on the carcass for the time being is in early stages and who benefits the most over the holidays. >> the one we've been talking about where target is a big winner there. that's just a great overlap there. and i think my sense is that they will get -- i don't cover jcpenney here. from where i sit, they'll do more to try to drive that traffic. it has been a benefit for target, for walmart, for everybody and i think it continues to be this holiday. >> is there more there to be had? >> i think there's more to be had. every holiday season it's always -- it almost always starts on day one. black friday is day one. i think there is an opportunity for them to come down. it's a lot of dollars.
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they are a big retailer. >> we'll leave it there. thanks for joining us. >> quite the year for the home building stocks. the index soaring about 100%. up a little bit more earlier in the year as we lost some gains. we'll find out i this is the beginning of the turn we've been waiting for. >> still ahead on the program, can the u.s. auto industry withstand the ripple effects from that looming fiscal cliff? former general motors vice chairman bob lutz will join us live.
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two home builders reporting results this week. a profit nearly tripled as sales rose. let's bring in will. the home building analyst with citi. good morning to you, will. >> good morning. thanks for having me. >> let's kick off with visa. you are quite clear. people should not hold visa. visa is not an investment that people should have in your view. why do you have that sell recommendation? >> if you look at horton and beazer, they are different builders. horton has fours year of finished lots and homes in
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inventory ready to go. beazer does not. it's a much smaller builder with smaller operating leverage. i'm going with the one with the best earnings power in the group. i want to avoid the one that doesn't. >> i understand that. the call is very strong on beazer with $11 price target. we'll see what they say in the conference call at the top of the hour. you are talking about it losing capital marginalization from here. >> beazer has 1/16th earning power. you can't get there in terms of valuation. number two, beazer is limited in terms of lots. they can't grow community count in 2013. they said that in their press release today. number three, a lot of their lots are still mothballed at this point. you can't grow as much as other builders on relative basis and
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can't get there in valuation. >> as far as horton is concerned, as we approach the $25 price target that you have, that's the buy recommendation in the wake of the results, what are your thoughts? are you mindful to raise that price target moving forward? do you think on strong gains we've had almost doubling in value that it is topping out? what's the guidance, if you like? >> there's valuation support here. horton is trading six times my normalized earnings estimate. builders trade around seven to eight times range on mid cycle basis. value in deferred tax asset. there's room for upside. i can't discuss my target directly in terms of thinking about that but horton has wings. >> is that your top pick? >> that's my only buy in the builder space given the run we've had. >> will, thank you for your time. interesting.
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>> thank you. >> a new report says u.s. will become the world's top oil producer more quickly than many thought. plus former gm vice chairman bob lutz is here to talk fiscal cliff fears and what it may mean for the auto industry. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms.
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the international energy agency coming through on new estimates on when the u.s. will become the world's largest oil producer and ultimately become self-sufficient in oil. sharon epperson has details at the nimax. good morning. >> good morning. it will mean a sea change for the international oil trade and of course for the u.s. energy landscape. the international energy agency is saying that the u.s. will become the top oil producer in the world by 2020. surpassing saudi arabia, surpassing russia and it's going to do this with the focus that
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we've had and the growing support of the north american fracking industry. that's really going to help to bring us to that nearly 10 million barrels per day which is what saudi arabia is producing right now. we are looking at these numbers also as an indication that as the u.s. continues to produce more oil and as we continue to consume less oil in our transportation sector with the fuel efficiency standards set in place, it's likely the u.s. will become self-sufficient for oil needs by 2035. that's another prediction by the international energy agency. this is a huge prediction on their part. they haven't made a prediction like this in the past. it has a lot to do with self-sufficiency in the u.s. story coming from environment moves that have been made perhaps under the obama administration as the chief economist pointed out in a press conference at the eia.
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another factor that they are looking back in terms of the international energy trade is the direction where oil is going and we're going to see a lot more of oil going from the middle east to asia as the u.s. becomes less dependent on middle eastern oil. that's something that will change. we're also looking at what's happening in terms of the natural gas landscape and there again the international agency is saying that we will see the u.s. becoming self-sufficient by 2035 and reducing its dependence in terms of where it will get natural gas and in fact becoming a net exporter of natural gas by 2020. a lot of key revelations here from the international energy agency. some say it may be too bold a prediction but many analysts have said the u.s. will have to change in terms of the debate that's been going on about foreign oil particularly what we heard over the election cycle. the fact that we are looking at the u.s. becoming self-sufficient by 2035 and in fact becoming the top oil exp t
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exporter by 2020 is something that will change this debate. back to you. >> sharon, a quick question. is the u.s. now importing natural gas? >> no. they are saying that there are some types of natural gas perhaps that are imported. no. they're talking about it becoming a net exporter by 2020. >> thanks a lot. question is what impact will this have on the oil markets? addison armstrong, a cnbc contributor. welcome back. >> thanks, carl. >> you make the point this may not move the market today but it may well move it longer term. what do you mean? >> i think we're looking at the board today and the markets just reacting to what it's been reacting to over the last few months. iea report is not a market moving factor. certainly the one thing that comes to my mind immediately is that the widesprea spread is ou
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historical new orleans. -- norms. the impact in the u.s. has meant higher gasoline price ace los ae east coast. if the u.s. is going to become this dominant producer as iae says, we're going to see lower volatility and eventually we'll see that spread come in and that should be better gasoline prices for u.s. consumers. >> if the iea is right, do you see political risk to things like fracking coming down? do politicians get religion here? >> i think they already have. certainly if politicians haven't, voters have. we need to look at the results in new york state in some of the local state elections where anti-fracking candidates were defeated very resoundingly. in areas where natural gas and associated gas liquids and even oil can be extracted through the fracking process, more and more you're going to see residents,
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homeowners, property owners speaking their mind saying this is a resource we want to see exploited not only for ourselves but for the nation and for our own energy independence. >> if this report comes true, does that mean that nat gas prices are destined to remain historically low? >> yes and no. natural gas until we get a sufficient pipeline infrastructure built out to handle some of the swings that we see in certain pockets and i think particularly in the northeast, you know, you're still going to see temporary price spikes. your thesis is correct and your question is correct in that longer term we have sufficient an abundance of natural gas until some of that fuel starts being funneled into the transport sector and resurgent chemical industry, i really think we're in for a long period of stable and certainly prices that are going back towards what we would have seen ten years
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ago. >> just because the iea says it's going to happen doesn't mean to say that it is going to happen. >> spot on. >> the implications are huge geopolitically would america become isolationist or patrol international waters if it didn't have to import oil. if you look at barclays when you go into fracking a rapid depletion of oil or potentially gas by 20% or 30% in the first year. these may not be sustainable wells as we have assumed. >> right. we certainly know that that is true in terms of the depletion rates and rigs. this technology is being deployed in such a wide area and so rapidly and with constantly changing technology that the issue for natural gas at this moment in terms of price isn't the depletion rate. it's the huge backlog of wells that have been drilled that haven't been connected to transportation networks to move it from the well head to the
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markets. so you have a lot of gas sitting there just waiting for the tap to be turned on and that will continue to happen because this is something that is changing the u.s. energy market and is something that at these prices is still profitable for the companies. >> before we let you go, what do you think they are saying in the halls of opec today about this report? >> i don't think halls of opec are that worried. china and the emerging market demand is not going to go away. it may not accelerate as quickly as some people had predicted. certainly the destination for oil from the middle east increasingly is going to be asia. it already has been. we are already looking at perhaps in the next five years according to this report today not importing anymore middle eastern oil to the u.s. which would be very interesting from a political perspective.
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>> lose a customer, gain a customer. we'll see if that happens. >> it is fascinating. thank you for your time. >> my pleasure. thanks, carl. >> market flash. >> hi, simon. news today mixed for pancreatic cancer patients unfortunately and companies. look at shares of clovis halting development of the pancreatic cancer drug. results didn't come out for extending survival rates. down almost 33%. but separately the results of phase three study for experimental drug and they say their drug did extend survival rates. shares up almost 5% for celgene. former vice president of general motors will be here to tell us why no solution in washington could drive new car sales off a cliff of their own. as we head to the break, another important fiscal cliff fact.
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one hour into trading. 7:30 on the west coast. 10:30 on wall street. shares of the world's biggest chip maker have lost more than a quarter of value in the last six months. the vix falling 4.5% dropping below 18. >> fiscal cliff is not only a big worry for markets, let's get perspective on the auto industry. bob lutz is former president of chrysler and cnbc contributor. he says if we don't get a deal to resolve the cliff, we'll see car sales plunge 20% to 40%. it's great to speak to you. you say it will be like 2008 all over again. it's going to be that bad? aren't we in a different time now? >> we're in a very different time but financial crisis is financial crisis. any time you have a financial crisis, car sales will drop 20%
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to 40%. they drop 60% in 2008, 2009, and look at europe who are facing european countries facing a fiscal cliff there not dealing with and the european car market is at record lows. >> wasn't 2008 the drop-off a lot contributed to the dry up in credit. consumer couldn't buy. there was also a lot of uncertainty. isn't that very different from what we're facing this time around with the cliff? >> it's different. if we have a financial crisis and if there are emergency measures enacted to deal with it, emergency taxation, austerity measures and so forth and so on, that drives up automotive demand for sure. >> bob, it's not clear that we're going to have a financial crisis. what is potentially clear is taxes are going to go up. let's take it back from financial crisis and just know what we're dealing with which is taxes are going to go up for everybody. what is the impact of that going
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to be? let's not say a financial crisis but just that. >> well, that's what i call dealing with the fiscal cliff and obviously someone is going to have to deal with it. i think raising taxes is going to decrease disposable income for a lot of people especially the wealthy. i would imagine that luxury car sales would be hit a little harder. they are talking -- my problem is the u.s. does not do indirect taxation. if i were emperor of the united states i would institute a 25 cent a gallon fuel tax which drives demand in the proper direction and i would put in 2% national sales tax. those are both kind of peanut buttering the taxes around everybody. nobody knows a difference after two months but it would raise revenue. >> don't you pinch yourself and say how the hell did we get into this situation? it's entirely of the politicians making? when i came to the united states
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i was told that big business ran america and it would never allow this situation to occur. this is the second time that it has occurred. why is it occurring? what is breaking down that we lurch from crisis to crisis and nobody takes the tough decisions? >> that's exactly right. the electorate does not like tough decisions. the electorate likes politicians who says everything will be all right. i'll take care of you. i'm going to -- if you're hurting, i'll give money. i'll take care of your health care. that's why we have the politicians we have. he who robs peter to pay paul will have a lot of people named paul voting for him. >> how do you change that? how do we -- we have a lot of big decisions. this is just the first of many big decisions. how do we get it right? what do we change? >> as they say, if i were emperor of the united states opposed to president, which i could never be being foreign born any way, i think it's going to take an extraordinary act of
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politics and maybe it is going to take a consensus between republicans and democrats and the u.k. got it done. the u.k. managed to deal with its financial problems and get the budget under control and get back to a more or less balanced situation. so far in the united states i have seen no willingness on anyone's part to do it and they won't tackle a fuel tax. europe has $3 to $4 of fuel tax. nobody is advocating that. we have 18 cents. it's ridiculous. 25 cents with the volatility of gasoline prices, a month after instituting it nobody would know the difference. it's so easy to do. yet the politicians won't touch it. >> as you know any comparison to europe is the worst thing you can say about anybody in this climate. you heard the same headlines over the weekend that we have. you probably might have seen bill crystal asking why republicans just don't take the president's plan. are you anymore optimistic on monday morning than you were on
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friday afternoon? >> not really, no. i think -- the natural tendency of democracies is to pretend that everything is okay until the bottom falls out and maybe when the bottom falls out then everybody will turn to and will have a bipartisan effort to get it fixed. it's this bottom falling out that i'm terribly afraid of. that's what would have the negative effect on sales of everything. >> bob, i'm somebody at home, i'm an investor. what i hear from you is that the auto industry, auto stocks, are basically a short at this point. if you were a holder of auto stocks, you would sell. that's a message that you rarely hear from a former president of chrysler. is that your basis of saying unless the predictions are hyperbole. >> some of my statements are always hyperbole. >> at least you have the disclaimer out there. >> i would not short anything. in fact, right now i would buy
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general motor stocks because i think the government will get out of it soon. >> you would buy even though we're going to see a drop of 20% to 40%. all right. >> no. no. i didn't say that. i said if it's not dealt with and if we have a huge meltdown. >> emperor bob lutz joining us live making a big pitch for that job. i'll tell you that. >> who knew? >> always great to see you. bob lutz. all right. let's quickly check on shares of jcpenney. we were just marveling at the steep decline we've seen in the shares. right now it's sitting at a fresh low. 1886 is the fresh low with shares down 8% at this point. credit suisse saying it is cutting by 40% to $15 a share saying time is no longer on jcp's side. >> those shares rebounded sharply from an initial sell-off. let's not forget they soared on the appointment of ron johnson.
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then came in substantially. in the summer if you recall in july an interview we did at our cnbc conference spoke positively about the future of the country and stock moved up sharply only now to fall back after those horrendous same store sales numbers on friday. >> when we come back this morning, a rare truce for apple in an ongoing patent dispute. is it the tech giant switching strategies? the campaign to fix the debt is running ads to get congress to avoid the fiscal cliff with slogans like just fix it. we're asking you to help the campaign and come up with your own slogan. tweet us @squawkstreet. the fule mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that
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steve jobs stood for thermal nuclear war to protect its company. but as apple settles, is it a new stance under tim cook? tony joins us to talk about it. >> good morning. >> are we getting less lit ijous and what does that mean? >> tim cook said he would favor to settle rather than battle in courts going forward assuming they could find conditions for settlement that were appropriate. it's important to remember that htc is a relatively small player in the larger smartphone market and accordingly in the patent wars. i think what we saw here were apple saying we got to concentrate where our firepower is going to be. htc is offering a settlement that seems reasonable and it doesn't make sense for us to continue to divert our energies in doing so. i think that's why we have the settlement with htc.
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>> this just allows them more energy with which to step on the gas when it comes to samsung? >> well, i think you could certainly view it that way. i also think you could view it as when conditions are in place that apple feels are acceptable, they're willing to settle. we know from the court documents in the samsung case in california that apple made an offer for samsung to pay a royalty to settle all patent disputes. samsung didn't take it. the royalty offer was a high one. apple has been consistent in saying that it would be willing to settle under the appropriate conditions. >> tony, which is more important? hardware war or the platform war that you believe it is waging with google and amazon? >> i think the two are hard to separate because increasingly the platform drives sales of the hardware. when people are buying an iphone versus a samsung galaxy 3s, they
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are deciding i want to be on the ios platform or i want to be on the android platform. so i think the two are very, very linked. apple is pursuing litigation on the patent side because it believes that it can up end momentum from android and believes that its patents were violated and believes it should have compensation for it. >> if the setmelement the settl with samsung over the long-term in. >> samsung sold nearly 200 million smartphones over the last 12 months. they probably sold tens of millions of tablets as well. call it 250 million units and royalty rates for devices could be anywhere from $5 to $30. apple offered $30 to $40 a unit
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for a royalty settlement. $10 a unit from samsung, that could be $2.5 billion in earnings power for apple which is not immaterial. >> quick question about some chatter this morning about the possibility of an iphone 5s to be in development in december. any validity behind that rumor? >> development is a nelbulous term. our belief is that iphone 5 was a significant leap frog in functionality. the 5s is likely to be less significant in changes. we're envisioning a 5s time frame in the fall of 2013. >> appreciate your time. high end retail name making a move in today's session.
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courtney reagan has the latest at hq. >> let's look at shares of sacks saks. retail sales come from region most hardest hit. they are extending sale for 11 days this promotional sale. not just in this region but nationwide, which means we could see a softer sale for saks early in november. >> did you see the new james bond film? >> i may have been the only one who didn't. >> the first film to debut in imax. richard gelfond will stop by to tell us his take on opening weekend. do you think your last hotel stay left room for improvement?
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we may have reached a key turning point for investors in travel and leisure. in order to survive hotels slashed slashing and investment. that drove consumer satisfaction to a seven-year low. but finally the hotel industry may have broken that negative spiral. here exclusively on cnbc, vice president at j.d. power & associates. welcome to the program, sir. what are you able to tell us? >> good morning, simon. thanks for having me. you're exactly right. the hotel industry has finally turned a corner and started catching back up to guest expectations. out of the economic downturn like many businesses they were operating on lower cost structures. as demand started coming back in the market that put a big strain on resources as well as the product itself. the room, the lobby facilities
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that had been deferred in terms of investment during the downturn. >> can you prove now, and you say consumer satisfaction is rising again. can you prove the consumer satisfaction leads to greater profits? >> yeah. j.d. power & associates not only in haaspy palty categories but across service industries, it's really not about satisfaction. it's about financial performance. companies and brands, hotels in particular that give great experiences, get higher levels of loyalty and advocacy. that translates into more revenue, lower marketing costs. higher levels of commitment. actually when it comes to ancillary spend, think about restaurants in a hotel, for example. customers will open their wallets wider and more frequently when they have a great experience. >> yet at the same time, if i was running a hotel, if i learned to exist on a low cost structure i would be very tempted to hold that cost structure down. >> that's right. that's part of the challenge right now is you have owners at hotel properties at the top end
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of the market. they can be real estate investment trusts or very well individuals down to franchise models at economy budget where it may be a family. until demand is stronger, they're loathe to spend too much. at the same time the brand management companies, those are the brands we're all familiar with, they want those hotels to be upgraded asap. there is a natural tension. we're not yet at a robust enough growth rate for hotels to be as aggressive as, perhaps, us customers would like. that's why they're turning the corner, but they still have a ways to go. >> just before we let you go, this is a big weekend or has been a big weekend for the hotel industry with the major conference. when are we going to get a hotel chain that is to lodging what amazon is to retail? i can check in from the car, knows what temperature i want the water to be at? we talk about this all the time. nobody is actually doing it, are they? >> no. that's a brilliant and astute observation. if you think about the heart of
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hospitality in a brand of amazon, how many times have some of you watching this program stayed at the same hotel chain. maybe you get the same bottle of water. do they really know you? if you like to run do hay send you in advance jogging trails nearby? personalization and custmization is what creates that sense of differentiation. i think you're right, simon. there's a tremendous opportunity out there for a brand or hotelier to seize upon that. the boutique hotels do it great. they have smaller scale. the challenge is how do you do it at scale for a large brand. >> have a great day. thank you for joining us. here's a pop quiz. what comes from india, about the size of a domino, and has generated about a 150% return in less than 20 years? find out what we're talking about after a break. from currency trading for a few
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talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news. if your wife or girlfriend is in the room, you might want them to step out for this next story, especially if you don't want to burn a hole in your pocket. we get up close with the ar archduke joseph diamond up for sale. it'sest ma estimated to go for
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millions. >> reporter: one of the rarest diamonds on earth. a whopping 76 carats of pure luxury up for grabs at christie's auction house. >> it's the quality, size, origin. >> named after its previous owner the ar shduke joseph diamond comes from a diamond mine in india where some of the world's most famous jewels have been discovered. this giant rock hit the auction block before in '93 and sold for $6.5 million. now it's expected to fetch more than double that price. >> could quite easily surpass $20 million. over 150% return on the stone. i don't know too many other investments that have given back this kind of return. >> christy's says this legendary diamond is more than just julie. >> it's no longer just a diamond. it's a piece of art. >> for cnbc, i'm robert frank. >> melissa, that would look awfully good. >> it would, carl. christmas is coming.
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>> christmas is coming. let's get squawk on the tweet. corporate executives are launching their own campaign calling on congress to act quickly on if fiscal cliff including ads with slogans like just fix it borrowed from nike. brings us to this morning's squawk on the tweet. help them out. mark writes larry the cable guy solution. get her done. congress, congress, hear my call. fix the cliff! don't fall. david tweets read the cliff notes. i don't want to see how that version of the story ends if they don't fix it. what's coming up tonight on "fast"? >> a technical analysis. market seems to be in a funk. dow and s&p continues below the 200-day moving average. the technical take from mary ann bartell and anthony scaramucci.
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>> that momentum to the downside is extraordinary in jcp. hewlett-packard, not a big percentage move down. it is a 52-week low. it's almost becoming a multigenerational low when you go back and look ten years. see it there. the positives here, will it be a lou gercner type turnaround --? >> she said it's going to take years. why would you possibly buy when she says it's going to take yoo -- years. do something else with your cash. >> many people are agreeing with that sentiment. of course, that is the best case scenario. we all know it may not be if it's not successful. >> we haven't talked a whole lot of rim today. reports that january 10th will be the day the launch for the blackberry 10, finally. a lot of people arguing if this doesn't work, what is left? stock's up more than 2%. >> how do you launch it? remember when microsoft had its new tablet. they had those pop-up stores. what does rim have to now do to
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generate that excitement? >> true enough. >> the nyse observing a one minute moment of silence and a few seconds to honor veterans day. dunkin niederauer on the podium.
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>> and with that, the second moment of silence on this veterans day as people remember veterans and their families, of course, throughout the generations of this great country. get a check on the markets today. the dow holding on to some losses here. down some 25 points. s&p is down almost two. nasdaq down six. of course, after a tough week last week, best buy getting a little action today. sharply higher after naming former william sonoma executive as its new administrative and chief financial officer. move will become official on december 10th. and meantime jc penney as we mentioned a moment ago the biggest loser on the s&p after getting a downgrade to under perform to neutral at credit swiss. they cut the price target from $15 to $25. analysts saying time is no longer on jc penney's side and
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turn around efforts could create a more challenging environment than seen today. the fiscal cliff is looming. defense spending is one of the potentially affected sectors. we'll talk to joe sestak, retired navy admiral and former congressman about why defense is so important. plus 007 making millions of dollars for imax over the weekend. the ceo is here at post nine with the latest numbers and a look at what's coming to theaters this holiday season. while most members of the 1% are fighting tax increases, we'll talk to one millionaire who's asking congress to please raise my taxes. a member of the patriotic millionaire organization will join us live. plus the startup making millions of dollars on crafts from knitting to baking. we will talk to the founders of craftsy. black friday more than a week away. retailers already throwing down the gauntlet. walmart, sears, target and toys r us all opening their doors to their big sales on thanksgiving night. courtney reagan has all the details on what it means for them this holiday season.
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>> good morn wk carl. let the games begin. first it was one upping on price matching. now it's a game of who will open the earliest. if retailers get their way shopping bags will be just as full as bellies on thanksgiving. walmart and sears were the first out of the early black friday gate. today toys r us which had one of the earliest openings last year announced it will open 8:00 p.m. thanksgiving evening and remain open throughout the night. target will begin black friday 9:00 p.m. on thanksgiving with additional door busters at 4:00 a.m. friday. kohl's and macy's will open at midnight. sports authorities will open most stores midnight for the first time. retailers are simply answering demand. last year nearly 25% of black friday shoppers did hit the stores by midnight. it's been particularly successful with millennials and men who would rather stay up late thursday and shop than hit stores predawn friday. most analysts believe early black friday will more than likely just shift when the sales are made. the goal is grabbing shoppers
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early and gaining market share in the process. though there is concern retailers will repeat last year's sins. the earlier consumers buy early, the less they buy late. that causes a promotional panic and then further slimmed margins. then again, this year's retail inventories are as lean as they've been in many years. that could likely help the bottom line. carl? >> we will see. it's going to start early on thanksgiving. thanks, courtney. courtney reagan back at headquarters. the president and congress have just a few weeks to figure out how to avert automatic cuts that would come from the so-called fiscal cliff. will washington fix the cliff on time? what could that mean for our nation's military. admiral joe sestak is a former representative of pennsylvania. joins us this morning. admiral, good morning to you. >> good to be with you on veterans day. >> fitting we're having this conversation on veterans day. what do you think if negotiations do not go well, what here is on the line? >> well, for defense, this $600 billion that is in the so
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quester, if they just take a razor haircut across the board it could be very harmful. how far, i would argue much like bowles/simpson commission presented that we could take a $600 billion decrease in defense if we do two things. first, remember an aircraft carrier today is one example can strike in 24 hours nine times the targets that same aircraft carrier could do just 15 years ago. because we rely not upon how many aircraft or ships anymore. we rely upon capability. satellites that can see a target pop up as an aircraft is in flight with miniature types of bombs on them that are laser guided and can have realtime targeting. that's number one. number two, if we do it wisely, we have to remember then our defense programs in 2008, we had a $300 billion cost overrun. that was because we and defense sometimes are under what we call the tyranny of optimism of how we budget. for example, when i ran the navy's $350 billion warfare
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program and we wanted to procure another aircraft carrier, the confidence that that number being right of $11 billion was 35%. you wouldn't buy a car if a car dealer told you with the confidence that you would get that price was 35%. >> of course. >> that's why i think we got to sit back and make sure we have a strong defense. let's do it like we want the other government agencies to do, be accountable with our spending. >> do you think the larger concern is about the capability of the military if the sequester happens or is it about the jobs affected? is it a combination of both? >> well, actually, it's a combination of both. and you used the exact right term, carl. it's no longer capacity. how many ships. how many aircraft squadrons. it's the capability. can you figure out where bin laden is and then have a force go and get them? for example, china has 82 submarines today. we have 50. it's like finding a needle in a hay stak. we want a sensor system that finds them and have an unmanned air vehicle go over and drop it.
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change from quantity to capability. second on jobs. if you remember the defense and aerospace association said that we would lose upwards of 1 million jobs if the $600 billion in the sequester goes through. there's only 3.5 million jobs in the entire defense and aerospace industry including boeing building civilian aircraft. that means for a 10% cut, we're going to lose 32% of our workforce. that's wrong figuring out. we do -- can't have defense be a welfare program. let's not try to scare everybody by saying maybe we don't need another ship. we need another sensor to find that submarine. that's the change we need in defense much like we need it in hhs and state department to be more efficient and cost effective. >> we've obviously got some tea leaves to read over the weekend when the president spoke on friday. the speaker spoke. a lot of pundits weighed in on saturday and sunday on the political talk shows. i asked this of the former gm chair a moment ago, whether or
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not he felt more optimistic this morning that he did on friday afternoon. i'll ask it to you right now. >> absolutely, i am. here's why. two reasons. they're the two men that head their respective parties. president obama doesn't have another election to undergo. and so he's removed from the weight of addressing entitlement reform which we must do. so the very far left can't pull him back from doing that. and then you have mr. boehner that i think we democrats should be thankful is head of the house of representatives who almost came to a grand bargain two summers ago with the president. now he's heading a party that's a bit chastised by not appearing modern and enough alike in this last election by the electorate. i think if these two men, particularly if they take the template of the bowles/simpson commission of having both revenues and entitlement reform and spending cuts, can come to a bargain to do that. not to do it, you know as well as i do, carl. that means by mid-march when that debt ceiling is hit, because we can't move the money anymore in treasury, we will
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have a broken american dream. they've got to do this. they must do it for the american people. i believe they will. >> there was that former -- that moment in the debate in which the president tried to argue the defense -- the military no longer uses bayonets and horses. do you worry if that argument is taken too far, that you do end up cutting a little bit too close to the bone? >> i'm always worried about that. look, we send our men and women forward into harm's way, they've got to have the very best. but the warfare domain has changed. you know, we have the great commons of the seas. our ships dmominate that. it's the great commons of cyber space, that capability we have to dominate much like we took down the centrifuges of iran where they were trying to build for a while and still are a nuclear capability. we wound down by cyber space attacks their centrifuges to delay them for a while. that's the type of dominance we have to switch to. not how many you've got of
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ships. what's the capability resonate on? you can do a lot more for less if you shift your money into the sensor based type of warfare. >> anybody realize over the last few weeks how much we rely on the electric grid knows exactly what you're talking. admiral, thank you so much for your time, admiral sestak. capital markets op-ed. gary kaminsky will way in on leucadia, jeffries. >> we'll get to na in a second. i was listening to the jc penney stuff at tend of last hour. do you remember when we had ron johnson on? january 25th last year, carl. we specifically asked him back then if there was going to be many changes to the plan. he said no, everything is set in stone. don't ever forget that. something i never will. speaking of last year, when i heard faber break the news on the jeffries/leucadia, remember shawn egan had come out back in november at the low and said a number of things was going to happen with the company which
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essentially were wrong. bad information. did not happen. leucadia came in. bought 2 million more shares at that time. increased their investment in the company. in fact it was a great opportunity for people as we reported back then to come in and buy jeffries stock. here's my thoughts as it relates to it right now. this is a transaction that's very expensive if, in fact, leucadia is simply trying to buy management. obviously richie is not going to run the combined company. the most important takeaway is simple. leucadia not a name widely known. stock down sharply today on the transaction. the shareholder base of leucadia love what leucadia represented. again, sometimes called the mini berkshire. also being very opportunistic. when you look at the holders, shareholders, come on in here. of a company like leucadia, when a transaction like this happens you have to assume management controls about 20% of this company. outside institutions control close to 80%. you look at the largest holders. fairhold capital. these are the june 30th datas.
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vangua vanguard. first manhattan. they've probably been there for 20 years. blackrock institutional, an index holder. what you need to recognize is that while leucadia shareholders liked them being an investor and taking advantage of things l jeffrey, i'm not sure the leucadia shareholder base wanted to own 100% of the investment bank especially given where return on equities are for these companies on this day and age. >> interesting what they built over there, gary, between manufacturing and now financials. we'll get to see how they -- get a look how they do down the road. talk to you in a minute. brian shactman has a market flash on boeing this morning. >> boeing is the top performer in the dow jones industrial average up about 1%. basically they've doubled their production rate of 787s from 2 1/2 a month to 5 a month. on their way toward ten per month. the more planes they build, the more they deliver, the more money they make.
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it's actually now positive for the year as well by about .75%. back to you. james bond just had his best weekend at the u.s. box office ever. that's saying something. the newest installment of the bond films is also the only one to run in imax. when we come back, ceo richard gelfond. later on, we'll meet one millionaire actually asking the government to raise his taxes to help avoid the fiscal cliff. we'll talk to him after a short break. [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
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♪ . that's adele singing the theme of the new bond film, the new james bond film. "skyfall" the biggest james bond opening ever. richard gelfond ceo of imax which featured "skyfall" in its theaters. you saw a piece of it, the film itself? >> i saw the whole film last night actually at lincoln square in new york. it's a different take on bond. sam mendy's reinvigorated the ch franchise. >> do they come to you and say we want the next one to be in
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imax? do you come to them? >> a combination of both. in this example our head of film went to see the head of sony pictures. we had just done "mission impossible," kind of a long standing franchise. trying to connect it with new audiences, fan boys. they said it sounded like an interesting idea. we did tests where it was filmed specifically for our aspect ratio. sam got more and more excited as the film went on. >> some directors choose to shoot it in imax. others can convert it after it's been shot. >> yes. this was somewhere in the middle. he didn't shoot an imax but he shot with cameras that are at different aspect ratios so it fills upmost of the screen in imax. it makes it even more special. >> how does this all hit the bottom line? >> the way it works, you look at a particular film and somewhere around 20%, 22% of the imax gross falls down to the bottom line over time. i don't think you can look at it
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on a movie by movie basis. we look at our rolling three-year averages. that's how we kind of budget. it's a portfolio. so films like this will do better than you think. some films won't do quite what you thought. it seems to even out at the end. >> the season for you is going to heat up here as we get in through the holidays and into next year. the tent poles? >> the biggest tent poles still to come this year is "the hobbit." i think it was like a runaway train. a lot of people didn't release movies this year thinking they're going to take away a lot of the box office. from everything i've heard i think that's going to be the case. then into next year we have a lot of films playing in different places in the world including le mis opening in europe at the end of the year. films in china. tent pole films include star
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trek shot with imax cameras in part. next part of hunger games shot with imax cameras. peter jackson's next installment of "the hobbit" and lots of other movies. >> stock's doing great. lots o f things coming up, would be fiscal cliff and potential drain on consumer confidence, consumer psychology. then the notion that streaming at hasier and easier. netflix of the world they battle it out and somehow the consumer has more incentives to stay home. >> in terms of the last issue, the one about streaming, i actually think that imax helps inventicize a movie. there's better technology in the home. but part of what's driving our growth on a worldwide basis and our network has quadrupled in the last four years around the world is exactly what you talk about. there's better home experiences. when people leave the home they want something really special.
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it's hard to get an imax experience in your house. >> does the cliff weigh on you? >> i think from a stock market point of view that causes me to pause. i don't really know it's going to affect consumers that much. the movie industry tends to do well in terms of economic downturns. imax is kind of an inexpensive getaway. from a personal basis it really weighs on me. i look at the election results and i think the country is really in the center. they want none of this. but i think hopefully washington will figure that out, too. >> i can't wait to see it. obviously in imax. thanks for coming by again. good to see you. when we come back this morning, it's a space more people see as more masculine. the defense sector getting more of a feminine touch. we will find out why after a break. i'm a conservative investor. i invest in what i know. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul.
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welcome back to "squawk on the street." brian shactman at the markets desk. we go from the top of the dow with boeing to the bottom with microsoft. steve balmer quoted in the parisian that sales of the new surface tablet are, quote, modest. of course, that's not very good. he cited supply issues, carl. the stock's down almost 2%. the bottom line is i don't think there's too much of wiggle room in translation. i think modest is modest. that means soft to investors. back to you. >> got to listen to what the man said. that's for sure. lockheed martin's new ceo marilyn houston joins the ranks of females running companies that used to be dominated by men. the rise of women in the defense sector. hey, jane. >> first, lockheed martin begins its second century with a big change in the corner office brought about by scandal with the resignation of incoming ceo
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described as a lengthy and close personal relationship with a subordinate which violates lockheed's nonnegotiate set of values. marilyn hewson gets the top job january 1st. sooefe she's worked her way up in the company nearly 30 years. her knowledge of operations will make the transition, quote, seamless. >> she's consistently grown revenue, expanded margins, generated cash. and for the past eight months has been working directly with me on a daily basis to transition the executive office. >> i think it's also important that a leader put in place an environment where people can do their best work, where they feel comfortable to bring their best ideas forward. after all, as a corporation, we are a technology leader and we need that innovation and technology and ideas every day. >> i guess the only question is why didn't she get the job in the first place? hewson not the only woman
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breaking the defense ceiling. phebe novakovic will become ceo of general dynamics. lynn is a hudson president of bae systems. corporate vice president glor ja tlach will prove to president of electronics systems at northrop grumman. on fortune's list of the 50 most powerful women in business are many women here and two more. linda gooden at global solutions and joanne maguire at space systems. a quick look at how lockheed is reacting this morning. down after that call. long call this morning with analysts trying to introduce marilyn hewson to those who don't know her, carl. >> with this potential sequester, jane, talk about baptism by fire. her hands full right away. thanks so much, jane wells. bells are about to sound across europe this morning. we'll get the close and the
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well, if you thought the drama was over the greece as they approve that austerity package, as they approve their budget for next year, not quite. simon hobbs is here to walk us through what's left. >> we've got the finance ministers. he's referring to the finance miners meeting in brussels. the greeks have passed all the
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legislation they were supposed to. but still the rest of europe will not sign off on giving greece the money because they don't believe it's sustainable. >> the european markets are closing now. >> at the bottom right hand corner, very importantly, the losses on greece. down 3.6% on this session alone. i'll come back to that. let's mention again what is happening in brussels. so you've got the finance ministers meeting. they are suggesting they will not give greece the money it needs to pay its bills because they still -- although it can have more time, two years extra to do what it has to do with austerity, they don't know how for the moment they're going to plug the gap. till they work that out, and actually until it's gone through the lower house of the german parliament, they're not going to sign off on anything. so a huge amount of anger from the greeks. the other thing that has happened importantly for greece today, the cabinet has released the details of its recapitalization plan for the
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banks. look at these heavy losses that you have on some of those banks today as a result. what they're actually suggesting is that the banks will have to issue shares of convertible bonds at a 50% discount to where the stock has traded over the last 50 days. even that only takes them ultimately with the injection to a 6% core tier ratio which isn't enough. heavy losses on the banks today. the result of that -- we spoke about optimism on greece buoying the stock market. the long term picture. the yellow line is the top 50 blue chips around europe. see the way in which greece was able to pull ahead on this optimism that everything right pull through? now you can see those gains they had beyond the rest of europe have essentially been eroded. let me just mention a couple of other corporate stories if i
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may. publicists, the french advertising giant, came out with up beat comments on digital advertising coming through the united states. i just thought i'd mention it. they say it may not be a long term trend for the quarter but it lifted publicists and wpp a bit. no question it is going to be tough regardless of the fiscal cliff on american defense expenditure. and that is reflected back today by a uk aerospace player. it's actually very big in in flight refueling. you see the stock down 9%. even if there isn't sequestration here in the united states, they will still see in 2013 low to mid-digit declines in their budgets moving forward. it's going to be tough in aerospace if you're selling into this u.s. market regardless of whether you actually go over the fiscal cliff, carl. back to you ent. >> interesting. let's get a capital markets op-ed from gary back at headquarters who's whipping out the charts.
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>> look at some pictures, carl. what do they say? a picture is worth 1,000 words? a trillion words, maybe? don't shoot the messenger. i want to show you a couple charts making the rounds within the industry over the weekend. this first chart, i'm going to stop talking. this is a chart making its rounds. look at that chart. that is the may through current period 1987. going back may through november 2012, this year. what you see there, man. for those that respect the technicals, take a look at what happened up until -- we just had that 25th anniversary. we celebrated it down -- not celebrated it. remembered it back at the new york stock exchange. take a look at that chart. something many people are paying attention to. the next chart is going to probably -- i'm going to get the nastiest, nastiest -- stay on that picture, please. i'm just showing this to you because people in thdust
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are looking at this. now, this is courtesy of tock mcclellan who does some great stuff. he did rca. historians will know in time rca was a stock everybody was on. look at apple overlaid with rca. just something to consider. take a look. again, you have to respect the technicals. i thought, carl, we should bring these two pictures to the viewers today because they are certainly making the rounds within the industry. >> i -- i mean, the '87 comp is interesting. the 1920? i mean, the 1920s, gary? don't techny c nnicals change a over, i don't know, 90 years? >> what that chart shows -- let's go back to the rca/apple chart. you're talking about two different companies. totally different market capitalizations. what it is trying to show, when there is a stock everybody wants to own there is a technology company that basically is going to dominate. again, we're not trying to
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say -- we're not trying to make an apples to apples comparison here. it is something to consider. there are a number of people that are trying to speculate out there. tom has just presented this for everybody to have their own opinion what it is like when you have a stock that everybody owns and there are very, very few people that have anything but positive to say about it. i am just showing it. please don't send me the hate e-mails. not necessarily i agree with it. i'm just simply putting it out there. that '87 market crash chart, that's a scary chart to look at. >> both of them have gotten a lot of attention. >> they have. >> gary, we'll talk to you in a minute. don't go too far. bob pisani is here at post nine walking us through the action today, at least. >> we call those ghost charts. don't you get a little scared looking at those things? i will withhold opinions on all of those. i've been dealing with that for 20 years. we're doing okay considering a lot of the silly talk i heard about going over fiscal cliff over the weekend. the markets are very, very calm. the vix has never exploded despite worries that are out there. that's telling you that right
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now the market still thinks a deal can get done. can i remind you we are -- the last time we had debates about fiscal cliffs, the debt ceiling negotiation, here it is, folks. august 2011. the vix went almost to 50. 300 points in the dow is nothing. remember that week that happened? look at what happened in the s&p 500. this is a three-year chart you're looking at at the vix. s&p dropped 6%, 7% that week when they couldn't agree on the debt ceiling negotiations. that was beginning of august. that friday they downgraded the u.s. debt, s&p did. there is what happened. right there. we dropped 6%, 6.5% one week. that following monday the s&p dropped another 7%. that's what happens. i'm talking 700, 800-point moves. forget about 300-point moves in the dow when we couldn't get agreement. the market is convinced they're not serious about it. that's why it's not funny business getting a deal on the fiscal cliff. let me move on here. i've said my piece for this morning. retailers, you hear courtney
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talk about all these retailers going to open on saturday -- excuse me, on thursday for thanksgiving. the walmarts, targets and sears. there's a very good reason why this is happening, folks. i'll put it to you very simply from what i'm hearing from the analysts. there's a perception consumers don't have an awful lot of money out there. consumers have already got their trips planned. they know what they want. they know where they want to shop. they're targeted. the retailers need to get to these consumers early before they run out of money. that's why they want to open on a thursday. that's the whole thinking here. of course, social media is becoming more important for these companies. look at the major companies out there this morning and you'll see jc penney which did not have a good earnings report on friday is down another 8% today. they're one of the ones that's opening friday morning at 6:00 a.m. early. not the thursday before. walmart, target, sears all slid to the downside. very mixed story with most of the retailers to the downside here. i want to talk about the home builders. because we continue to get earnings reports in that are on the mixed side.
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beazer came out with numbers that looked okay on the bottom line, a little better. order rates were lower. year over year orders only up 10%. most of these builders, remember, are up 20% to 25%. this was a little bit below expectations. that was a problem. look at beazer down 14% today. d.r. horton has numbers out. they were pretty good. order rate about 24% compared to the same period last year. about in line with what most people were expecting. d.r. horton is down but not nearly as much. some of the other home builders are down. the important thing here, carl, is that the home builders have been one of the great performers for the year. if you put up the itv, you can buy the home builders as an exchange traded fund. a single group of stocks. we're talking about a 60% move up. we are just fractionally off of the highs. no real technical rollover, nothing is falling apart even though we're having not a good day today. homebuilders have been one of the great performers for the whole year. >> and for the broad economy,
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too. >> the problem is they're like the airlines. very small group with not a lot of money in the group overall. you get a lot of big piles. that's why you've got 60%. >> good stuff. thanks, bob. brian shactman has got a market flash on sony this time, brian. >> "skyfall" not preventing the stock from falling. it produced "skyfall," made about half a billion globally. not stemming the bleeding on the stock now down more than 40% for the year. back to you. >> thanks so much. zblrjts when we come back, a millionaire who is asking congress to please raise my taxes. a member of the patriotic millionaires organization will join us to explain his position. later on, do you like to knit? do you like to make scrapbooks? perhaps even dabble in metalsmithing? if you do, you're not alone. the craft and hobby industry is valued at around $30 billion. a new website called craftsy is filling a void, seizing an
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opportunity in craft-based online education. we'll talk to the founders when "squawk on the street" comes back. gecko (clearing throat) thank you, mr. speaker, uh, members of congress.
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coming up on halftime in just a bit, countdown to the fiscal cliff. we're keeping your money from going over the edge no matter what happens in washington. an apple bear turned bull tells us why now is the time to buy the stock despite calls that teenage of apple is over. and black thursday. will retail's new strategy backfire or rally the stocks? see you in about 15 minutes or so. now to something you don't hear every day. a millionaire who says, tax me more. the patriotic millionaires is a grassroots group of more than 250 wealthy americans. they're asking for their taxes to be raised to improve fiscal strength in this country. jeff goral is one of those patriotic millionaires. also chairman of new mark night grub frank. how did this all get started? >> well, i was called by some people and asked if i would join the organization. frankly, i readily agreed. i think that wealthy americans have done very well in the last
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dozen years with the tax policies of the bush administration. and it's clear that we have huge deficits. and that it's time for compromise and for us on the wealthy side to compromise by paying higher taxes in exchange for lower cuts in government spending. so i'm not just advocating raising taxes, but we need a balanced approach. and the republicans seem to be dead set against raising taxes on wealthy people. and that's just ridiculous. to put us over the fiscal cliff for that reason, it just seems to me frankly, to be honest, i think the biggest problem we have is grover norquist. i think all the republicans have signed this pledge not to raise taxes. he's made it clear that if they vote to raise taxes, he's going to take action to defeat them in a primary in two years. >> right. >> no one elected grover norquist. i think we just had an election. i was shocked, i heard this morning that actually mitt got 2
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million less votes than john mccain. which no one would have thought. the election wasn't all that close. >> turnout was obviously different than '08. your point is well taken. we're looking at a picture of grover. we had over the weekend bill kristol, another influential voice on the gop said say on fox i don't understand why republicans just don't take the president's offer? are they really going to defend millionaires, half of whom voted democrat and half of whom live in hollywood? those are kristol's views. i wonder if you think the norquists of the world are getting marginalized here? >> i certainly hope so. he wasn't elected to anything. you can talk to wealthy people. no one wants to pay more taxes. but, believe me, we don't get out of bed in the morning and try to figure out what our tax rate is and decide whether we're going to go to work or not. we go to work because that's what we do. i also think democrats have to compromise on entitlements. i don't see why they can't raise the retirement age for people who are maybe younger than 40,
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medicare. everything has to be on the table. when you hear boehner say that raising taxes is a nonstarter, as an american who realizes that going off the fiscal cliff would be a disaster, i think that's crazy. i would hope that the wealthy people like myself would reach out to the republicans and say, look, if we have to pay higher taxes, so be it. as long as it's tied into reforms on medicaid, social security, and other cuts. i know the president, his plan when i was in washington recently was a dollar of revenue for $2.50 in spending cuts. that seems like a plan. >> jeff -- >> i think we got to stick to that. >> is the group taking a stand on either what level of income should see tax rates rise, how much -- you mentioned the ratio just now. are you taking an official stance behind any of those metrics? how rich is rich in this country? >> look, we all agree if you live in new york, i've heard the argument making $250,000 doesn't make you rich.
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but, on the other hand, we've seen a tragedy here in new york. i own the meadowlands racetrack. i have 70 people living there who came from north carolina. and they're cooking the meals that the red cross serves. i asked them how long they're going to stay. they said as long as they're needed. everybody has to sacrifice. we see people in the national guard that have been calmed up over and over and over again. it's time that americans come together. we all sacrifice. if someone who makes $250,000 has to find $10,000 extra, they'll find it. you don't see a lot of foreclosures of wealthy people's homes. i know -- you know this. in new york if you go into a fancy restaurant, they're all crowded. >> sure, sure. >> wealthy people are doing fine. it's the middle class that's really hurting. and it's time that we all -- we had an election. there was a proposal from the republicans on the table not to raise taxes. that proposal lost decisively. it's time to support the president and do the right thing
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here and not tinker -- if you're going to try to change the tax code, you can't do it in two weeks. and we've only got two or three weeks. >> sure enough. >> thanksgiving and christmas. we want to change the tax code, let's look at it carefully next year, hold hearings, analyze. but to try to make those changes quickly in two to three weeks, that's crazy and dangerous. >> speaker boehner said on friday you're going to target -- if you do this you're going to target some entrepreneurs in the middle of the country who employ others and jobs will get caught in the crossfire. how is that not true? >> because what he's saying, he's right. most people pass it through. in other words, if you have a sub "s" corp. or llc, you're not taxed at the corporate level. you're taxed at the normal level. let's face it. if a corporation, somebody owns a company that makes $250,000 of taxable profit and they have to pay $10,000 more, it is what it is. how are we going to get this
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deficit under control? and believe me, that's not going to stop them from hiring people. they'll hire people if there's a demand for their product. i think everyone would -- i'll guarantee you that if we make a deal at the end of december that you'll see the economy take off. because we all have been worried. we want certainty. >> of course. >> we've all been worried about the uncertainty that's existed. >> jeff, always good to talk to you. controversial position. appreciate you coming on the show. >> thanks for having me. when we come back, before you pin something on pinterest or sell something on etsy, learn to craft on craftsy. already more than 600,000 students have taken at least one class. that's a lot of curling. it's also a potential source of a lot of money. crafts is a $30 billion industry. we'll talk to the founders after a break. s. s. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms
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have you been feeling crafty lately but don't know the difference between a knit and a pearl? you're in luck. craftsy offers online courses about all your favorite crafty topics. taught by amazing instructor. with over 1 million registered users from over 200 countries and more enrolling every minute. find out yourself how to do it yourself. with a little help.
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>> a look at craftsy this morning. the co-founders of craftsy join us from my hometown of denver this morning. good morning to both of you. good to have you. >> good morning. >> i was just watching that piece of tape and thinking if we had run that a few years ago a lot of investors might have thought, that's not a doable idea. but things like pinterest have changed that. you're a year old. how is business? >> business is great. i think we've tapped into an underserved demographic and a hugely passionate demographic in big industries. >> i'm guessing, josh, the percentage of core users who are women has got to be overwhelmingly high? or is that true? >> that's exactly right. 99% of our audience is women. most of them are age 40 plus. so as john mentioned, for a technology company we're serving a market that isn't often served by companies like us. >> walk me through what the business model argues.
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you've got these women who are obviously into these hobbies. i guess whether they're working or not. it's not depending on employment, per se. but who are you displacing? from whom did they learn these skills before you guys came along? >> well, we think it's a pretty disruptive change. because the previous modalities of learning were either live classes, magazines, tv or dvds. so what we've essentially done is we've removed geographic constraints and time constraints as our classes are available any time of day, 24/7. and you can take them as many times as you want. >> really from our perspective it's about access. the promise of unlimited education is very much about growing the pie. while we're displacing a little bit of traditional education, more than anything we're expanding the access to education significantly. >> interesting. highest price for a class? anywhere from $10, what, to $50? is that about right? >> yes.
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$49.99 is our highest priced class. >> most popular class, quilting. not too much of a surprise. other ones, sewing, knitting, cake decorating, jewelry decorating. i was interested in this. that facebook has been a big part of your growth. i wonder as we've watched some other companies struggle with that and the inevitable divorce, i guess, over time as you get bigger, are you trying to get more or less reliant on facebook right now? >> i mean, facebook's a great channel for us. because people currently on facebook aggregate within their current friend groups. but we've allowed people to expand their concentric friend groups in our clubs to meet more people who are interested in their specific hobbies. so, for example, our quilting club has over 250,000 members in it. and they have access to free content, materials as well as previews of our upcoming classes. and, as you mentioned, quilting is one of our most successful
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categories. we currently have 29 courses in quilting. and the courses range from four to nine hours in length. it's a ton of great content with the best instructors from around the world. >> yeah. i mean, you're talking large numbers. you got a new app. i'm sure it's not the last we are going to hear from you gentlemen. thanks so much for your time. good to talk to you. >> good to talk to you as well. thank you. >> go, broncos. keep those tweets coming. corporate execs are launching their own campaign calling on congress to address the fiscal cliff. running more than $1 million worth of ads starting today. we want you to come up with your own slogan to get congress to fix the cliff. tweet us your ideas at squawk street. we'll read some of them after the break. ♪ ♪ [ male announcer ] 'tis the season to discover the kid in all of us. the memories that last, start with the gifts that last.
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squawk on the tweet this morn ing. corporate executives are launching their own campaign, calling on congress to act quickly on the fiscal cliff including ad spots with slogans like just fix it borrowed from nike. we're asking you to come up with your own slogan. chris rights forget the pledge, get away from the edge. robert rights don't fight it, just fix it. anderson writes, wylie coyote went over the cliff. cartoons and politicians. can you tel